U.S. CHAMBER OF COMMERCE CORONAVIRUS EMERGENCY L …

Prepared by the U.S. CHAMBER OF COMMERCE

CORONAVIRUS

EMERGENCY L ANS

Small Business Guide and Checklist

Updated: March 19, 2021

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The Coronavirus Aid, Relief, and Economic Security (CARES) Act

allocated $660 billion to help small businesses keep workers

employed amid the pandemic and economic downturn. Known as

the Paycheck Protection Program (PPP), the initiative provides 100%

federally guaranteed loans to small businesses.

Importantly, these PPP loans may be forgiven if borrowers maintain

their payrolls during the crisis or restore their payrolls afterward.

Update: Congress recently extended

the PPP application deadline to

May 31st.

The administration¡¯s PPP program guidelines can be found at

, and the U.S. Small Business Administration's

search tool to find a bank that offers PPP loans can be found at

.

The U.S. Chamber of Commerce has issued this step-by-step guide to

help small businesses and self-employed individuals check eligibility

and prepare to apply for a loan. Here¡¯s what you need to know.

TH A N K YO U TO O UR P R E SE NT ING PART NE R

1 Am I ELIGIBLE?

You are eligible to apply for a PPP loan if you are:

? A small business with 500 or fewer employees

? Defined as ¡°small¡± by SBA Size Standard that allows for higher

employee threshold or is revenue based; or

? A small business with maximum tangible net worth up to $15

million and the average net income for full 2 fiscal years prior to

application does not exceed $5 million

? A 501(c)(3) with 500 or fewer employees

? A sole proprietor, independent contractor, or self-employed

? A Tribal business concern that meets the SBA size standard

? A 501(c)(19) Veterans Organization that meets the SBA size standard

In addition, some special rules may make you eligible:

? If you are in the accommodation and food services sector (NAICS 72),

the 500-employee rule is applied on a per physical location basis

? If you are operating as a franchise or receive financial assistance

from an approved Small Business Investment Company the normal

affiliation rules do not apply

? Small businesses that have minority shareholders (private equity or

venture capital) can still qualify if those shareholders relinquish rights

2 What will lenders be

LOOKING FOR?

Borrowers will need to complete the PPP Loan Application

(which is available HERE) and payroll documentation

What lenders will

NOT LOOK

FOR

Lenders will also ask you for a good faith certification that:

1. The uncertainty of current economic conditions makes the loan

request necessary to support ongoing operations

2. The borrower will use the loan proceeds to retain workers and

maintain payroll or make mortgage, lease, and utility payments

3. Borrower does not have an application pending for a loan

duplicative of the purpose and amounts applied for here

If you are an independent contractor, sole proprietor, or self-employed

individual, lenders will also be looking for certain documents

(final requirements will be announced by the government) such as

payroll tax filings, Forms 1099-MISC, and income and expenses from

the sole proprietorship.

P repa red by th e U.S. CHAMB E R OF COMME RCE

? That the borrower sought and was

unable to obtain credit elsewhere.

? A personal guarantee is not

required for the loan.

? No collateral is required for the loan.

3 How much can I

BORROW?

Loans can be up to 2.5 x the borrower¡¯s average

monthly payroll costs, not to exceed $10 million.

How do I calculate my average monthly

PAYROLL COSTS?

sum of

INCLUDED

payroll costs

sum of

EXCLUDED

payroll costs

PAYROLL

COSTS

INCLUDED Payroll Cost:

1. For Employers: The sum of payments of any compensation with

respect to employees that is a:

? salary, wage, commission, or similar compensation;

? payment of cash tip or equivalent;

? payment for vacation, parental, family, medical, or sick leave

? allowance for dismissal or separation

? payment for group health care and retirement benefits

? payment of state or local tax assessed on the compensation

of the employee

2. For Sole Proprietors, Independent Contractors, and Self-Employed

Individuals: The gross income (Line 7 of Form 1040 Schedule C) not

more than $100,000 in one year.

Borrowers can refinance a SBA Economic Injury Disaster Loan (EIDL)

into a PPP loan: The EIDL amount is added to the payroll calculation

but may not exceed the $10 million PPP loan.

EXCLUDED Payroll Cost:

1. Compensation of an individual employee in excess of an annual

salary of $100,000 (note: employer contributions to healthcare and

retirement benefits are not part of amount deemed in excess of

$100,000 annual salary)

2. Employer portion of payroll taxes

3. Any compensation of an employee whose principal place of residence

is outside of the United States

4. Qualified sick leave wages for which a credit is allowed under section

7001 of the Families First Coronavirus Response Act (Public Law 116¨C

5 127); or qualified family leave wages for which a credit is allowed

under section 7003 of the Families First Coronavirus Response Act

P repa red by th e U.S. CHAMB E R OF COMME RCE

NON SEASONAL EMPLOYERS:

Maximum loan =

2.5 x Average total monthly

payroll costs incurred during 2019

or one year prior to the loan date

For businesses not

operational in 2019:

2.5 x Average total monthly

payroll costs incurred for

January and February 2020

SEASONAL EMPLOYERS:

Maximum loan =

2.5 x Average monthly payroll

for any 12 week period

between February 15, 2019

and February 15, 2020

? Payments deferred for

six months

? 1.00% fixed interest rate

? Loan is due in five years

4 Will this loan be

FORGIVEN?

Borrowers are eligible to have their loans forgiven.

How Much?

A borrower is eligible for loan forgiveness equal to the amount the

borrower spent on the following items during the 8-week period

(or 24-week period for loans issued after June 5th) beginning on

the date of the origination of the loan:

Free

FORGIVENESS

CALCULATOR

? Payroll costs (using the same definition of payroll costs used to

determine loan eligibility)

? Interest on the mortgage obligation incurred in the ordinary

course of business

? Rent and utility payments

? Interest on other debt obligations incurred before

February 15, 2020

NOTE: Not more than 40% of the forgiven amount may be for non-payroll costs.

The Association of International

Certified Professional Accountants

(AICPA) developed a PPP

forgiveness calculator that can

be found here.

How could the forgiveness be reduced?

The amount of loan forgiveness calculated above is reduced if there

is a reduction in the number of employees or a reduction of greater

than 25% in wages paid to employees. Specifically:

Reduction based on reduction of number of employees

PAYROLL

COST

Calculated

on page 2

Average Number of

Full-Time Equivalent

Employees (FTEs)

Per Month for the

8-Weeks Beginning

on Loan Origination

Option 1:

Average number of FTEs per month from

February 15, 2019 to June 30, 2019

Option 2:

Average number of FTEs per month from

January 1, 2020 to February 29, 2020

For Seasonal Employers:

Average number of FTEs per month from

February 15, 2019 to June 30, 2019

Reduction based on reduction in salaries

PAYROLL

COST

Calculated

on page 2

For any employee who did not earn during any pay period in 2019 wages

at an annualized rate more than $100,000, the amount of any reduction in

wages that is greater than 25% compared to their most recent full quarter.

What if I bring back employees or restore wages?

Reductions in employment or wages that occur between February 15,

2020 and April 26, 2020 (as compared to February 15, 2020) shall not

reduce the amount of loan forgiveness IF by December 31, 2020 the

borrower eliminates the reduction in employees or reduction in wages.

Private lenders will ultimately issue

PPP loans based on guidance from the

SBA and Treasury Department. More

information, including from lenders, should

be available once the guidance is issued.

P repa red by th e U.S. CHAMB E R OF COMME RCE

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